Dr. Loretta O'Sullivan:

I thank the committee for having us here today. I want to talk a little about the economy. I will begin by saying that today’s economy is doing well. Ireland is expected to put in a relatively good growth performance this year as inflation tracks lower and the interest rate cycle turns. The labour market remains strong. We have full employment, the unemployment rate is low and the public finances are healthy. That we are in this position after a series of significant external shocks, such as Brexit, Covid-19, war in Ukraine and conflict in the Middle East, speaks to the resilience and can-do attitude of Irish households and businesses. It also reflects the underlying strengths of the economy, including a dynamic FDI sector and talented indigenous entrepreneurs, a skilled workforce and world-class universities and an enterprise-friendly environment.

There is a lot to be positive about but there are headwinds and if Ireland is to keep pace with developments in global markets, we also need to cultivate the seeds of tomorrow’s growth. This means doubling down on efforts to boost the labour force, bolster the capital stock and enhance productivity. We can do this by upskilling employees, investing in necessary infrastructure, accelerating the green transition and harnessing the power of new technologies such as AI.

Along with sustainability, digitalisation is reshaping all of our economies and AI stands at the forefront of this transformative wave. Although the full extent of its economic and social consequences is not fully understood yet, it clearly has the potential to enhance productivity. When it comes to the labour market, technological innovation typically impacts through job creation, where new roles and opportunities emerge; job displacement, where functions become obsolete due to automation; and job transformation, where the nature of tasks is augmented. As AI adoption increases and skill requirements change into the future, it will be important to ensure that enterprise and education policies are in place to promote and support inclusive training and life-long learning.

As the National Competitiveness and Productivity Council highlights, the AI landscape is rapidly evolving and early adaptors stand to gain significant economic, strategic and competitive advantages. EY’s forthcoming FDI attractiveness survey finds that AI would help some two in five international investors expand their mandate in Ireland over the coming years, reinforcing the fact that as a small open economy, this is a must do if we are not to be left behind. Ireland is well positioned in this regard, given that we have a national AI strategy, here for good, in place since 2021, with the most recent update showing progress against all key strands. However, the focus at all levels must be maintained. In EY, we believe that now is the time to invest in the drivers of next generation economic growth, including AI. From past experience, we know that such investment pays dividends many times over, helping to bring about a more prosperous society for all.